You keep saying that you have no debt other than car and credit cards. Do you own the house free and clear or is there an $80k mortgage on it too?
Let's assume there is an $80k mortgage and the house is worth $50k as you say it might be. You don't have much choice in selling with a $30k short offer on the house. You will have to make that up at closing since the bank will not allow you to sell the house unless they proceeds are enough to pay off the mortgage. You can't sell a property without paying off all loans in full unless the bank approves a short sale allowing you to. You don't sound like you would meet the qualifications of a short sale which include:
Behind in loan payments
Loss of job
or some sort of hardship.
The bank will check to see if you have any savings and unless you have no money in the bank and at least some sort of hardship then the bank will not likely approve a short sale. So your options now are stay where you are, stop making payments and don't save any money, sell short and make up the $30k from your savings or look into renting it and seeing if you qualify for a new loan then.
If you do not have the extra $30k and cannot borrow it from a 401(k) then you may want to keep the house and rent it out. Talk with a lender because you may have to rent it out for over a year before you can include the rental income to offset that mortgage. I know some people who have rented out their current house for a year while they rented the least expensive rental in order to allow them to buy a nicer larger house.
Speak with a lender or credit union first. I can recommend http://www.Amerisave.com/myrea/Alma or your credit union.
All the best,
When property values recover, you can either continue to be a landlord or sell the home. In your case, I would suggest you take a good hard look at the potential consequences of short sale in terms of higher interest rates for the next few years... it's probably not worth it. A local Realtor can advise you on how much they think your home might rent for... quite likely higher than your mortgage payment, making this even more fiscally sound.
1. Rent it out
2. Speak with your lender and see if you can do a Short Sale. You do not have to be behind to sell it.
3. Speak with a lender to qualify you now for the new home. I will have your wife 1st in the application and
you as a coborrower. . They will considere your mortgage on the 1st home as a debt.
Hope this help. Good luck
Ada Sanchez, CDPE
Certified Distressed Property Expert
Pacific Atlantic Realty Services Inc,
407-342-2664 - firstname.lastname@example.org
I suggest that you contact your lender to see if you can sell the home for less than it's worth (a short sale). This way your credit will not be affected as badly as being foreclosed on.
I also suggest that you contact a local real estate attorney or perhaps an experienced real estate agent in your area to best determine what your options are.
Prudential Connecticut Realty